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joel hoffman

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  1. Vern mentioned separate line items or sub-line items for self-performed work including similarly situated subs and/or JV members and separately for other subs. If you are saying that, one can’t determine or otherwise require substantiation of the amount of similarly situated or non similarly situated subcontracting for service contracts, well then I guess you revert to service contracting 101. See above illustration.
  2. Don- Verifying compliance with what specific requirement? And are you referring to construction, services or what? I was describing tools for how to verify compliance for construction. The contractor would have to substantiate that a sub is a similarly situated sub if it wants to take credit for that as self performed work. In looking at the numerous categories of set aside programs, I’m sure that the SBA would know whether a firm is in the program. If you are saying that it isn’t possible to verify that a firm is a similarly situated small business firm, That makes no sense. And, for a sole source negotiation, the proposed prime or 8(a) would have to provide substantiation during the negotiated formation process.
  3. It means, in the context of enforcement of this particular contract requirement, to be oblivious to it. According to Don, the government isn’t allowed to ask for any evidence of compliance or to require the contractor to substantiate that a similarly situated subcontractor is, in fact a similarly situated small business. So several here have indicated that it is “prudent” to essentially ignore it unless you learn of a problem. If you don’t know how to tell if they are complying, then look the other way. if you feel that the requirement is a performance requirement, to be left to the contractor’s discretion on how to comply, a proper performance requirement includes substantiation. Substantiation is an Inherent aspect of performance specifying. Simply ignoring the requirement, is obliviousness and not performance specifying, enforcing it by exception. Then it is rendered useless.
  4. Therefore, you wouldn’t bother to verify that the similarly situated sub(s) is/are, in fact similarly situated sub(s)? The other subs don’t matter. That would then make perfect sense under service contracting 101…
  5. Don, the question you are asking would be applicable to any contract or order that is subject to the limitations on subcontracting clause where the prime or 8(a) “subcontractor” wishes to claim credit for similarly situated subcontractors share of the contract. Therefore all current PCO’s should be able to verify or obtain verification that the subs qualify as small businesses, right? I am retired and don’t need to know. But I’m guessing that to claim status as a small business, a firm would certify under the SBA procedures and be listed in their database. There are penalties for false certifications, too. At any rate the firms would have to show that they are small businesses or similarly situated firm.
  6. Again, it doesn’t matter, unless they want to take credit for similarly situated subs. Actually, the new -14 clause is simpler than the old one. And, unless the SBA’s CFR has changed, if it’s subs don’t identify the amount of their materials in their subcontract price, it doesn’t get excluded from their payment for calculating the amount paid to subs.
  7. How do You verify that a subcontractor is small or that a prime is small? You likely take their word for it. If the prime wants to claim credit for a similarly situated sub, they need to show it. Otherwise it doesn’t matter whether a sub is small or not.
  8. From 52.232-5 “(1) The Contractor's request for progress payments shall include the following substantiation: (i) An itemization of the amounts requested, related to the various elements of work required by the contract covered by the payment requested. (ii) A listing of the amount included for work performed by each subcontractor under the contract. (iii) A listing of the total amount of each subcontract under the contract. (iv) A listing of the amounts previously paid to each such subcontractor under the contract. (v) Additional supporting data in a form and detail required by the Contracting Officer.” The prime must also advise whether and how much any retainage is to be withheld from any sub or supplier from a progress payment. The government then deducts such withholding from the progress payments to the prime until the prime is ready to pay what was retained/withheld. Sure, something might arise during contract performance that might affect the “plan”, such as government changes that add or subtract from self performed or subcontracted work. That would have to be evaluated and it might be impossible to execute the plan as originally envisioned. I think in that case, a good faith effort would have to be taken into account. It’s not a contractor’s fault or within their control if the government changes the requirements during performance. EDIT: I don’t really want to conjure up, nitpick or debate possible anomalies. Under Service Contracting 101, the KO would likely not bother tracking, let alone determine actual percentages.
  9. Actually I took a thermodynamics class including rocket (and jet) propulsion, an aerodynamics class and another one on aerospace trajectories in college under the Air Force’s manhole - oops I mean “whole man” concept. “Fast Neat Average Friendly Good Good”. And in construction contracts, it’s quite simple. The contractor must provide that information with each progress payment request. Easy to track.
  10. If the contractor is required to comply with a limitation, how does it know whether or not it is complying? Of course it has to have some system to know! Y’all are making mountains out of a mole hill. Service contracting 101…Burying heads in the sand or looking the other way, hoping it will go away… And if you negotiating a sole source task order or contract, the contractor’s proposal should reveal the plan and the proposed costs for prime and sub work. It’s not rocket science. And if it’s a FFP construction contract, the contractor must provide the details in each progress payment invoice per the payments clause.
  11. WifWaf, my last post wasn’t specifically directed at you. However, I noted that you are apparently hesitant to interpret or obtain help interpreting the rules**. If you leave it up to each offeror or contractor to interpret and argue various interpretations, of course it will become more complicated and controversial/confrontational, too. That’s why I consulted the Atlanta Regional Office (back in the day) and sent them the forms with our explanations to review and concur/non-concur with before we used it. Yes, the rules have changed, so obviously my forms arent current. Maybe you don’t negotiate sole source contract actions. But if you do, you should have or can get enough information to be able to negotiate and mutually determine whether or not the proposal is compliant. ** Merriam Webster Dictionary “Definition of timid: 1: lacking in courage or self-confidence-a timid person 2: lacking in boldness or determination-a timid policy”
  12. And the excuse that it is unclear, ambiguous or too confusing to figure out is a cop out. I coordinated with the SBA to develop the form and clarifications/explanation accompanying the forms. The government has an inherent duty to understand the requirement, which is not just regulatory.
  13. WifWaf, I can certainly understand your timidity to evaluate a firm’s intent to comply with limits on subcontracting/self performance requirements in a source selection. And I don’t doubt that you are too busy to spend an extra five minutes per proposal reviewing a filled in form and deciding whether it passes the sniff test. However, if you are negotiating a sole source contract, there is nothing to prevent you from determining whether or not the proposal aligns with the requirement before awarding it.
  14. I began my civil service career in a culture of low bid, IFB culture where the contracting personnel and the design project managers were strictly rated on making awards, not on the quality of the design or the contract or whoever they awarded to. So shzt was produced. ShZt went out the door. Dirt bag contractors continued to get awards. The slogan was “Construction (ACO’s and contract administrators) will fix it. Separate PM for construction. Change Orders, REA’s, Claims, delays, time extensions LD’s out the Wazoo. Civil Works projects were the exception to the rule because of the safety impacts of poor design or construction and we were our customer. Then we went to where the PCO function was transferred from the Military to the 1102 Civilians and the consecutive PM arrangement was replaced by a life cycle PM, who along with Contracting were now responsible for the consequences of crappy designs and upset customers and were involved during contract execution. We moved from IFB’s to competitive negotiations and best value. Oh - and the field finally realized that the performance ratings were more meaningful, instead of being ignored, so more effort was put into them. By the way, Congress established the requirements for contractors to self-perform some work and manage the work and for limitations on subcontracting. Looks to me like, the culture is shifting back to emphasis on just getting it out the door and awarded.
  15. I was very proactive about it. Our USACE District was spending millions of dollars each year on military and civil works construction projects that were set aside or reserved for small disadvantaged businesses. I was the chief of the District office that negotiated all sole source construction acquisitions and conducted all construction and design-build source selections, among other major Contract Admin duties from late 1989-early 1997. It was not uncommon to see various attempts by large businesses and small, non-SDB owned business companies to “capitalize” on these otherwise restricted business opportunities. We saw all sorts of schemes to make it look like the primary entity was actually going to manage the contract or self-perform the required share of the work. Examples included, “loaning” the key management and/or Supts./foremen personnel or trade labor operators to the primary party; CTA or JV agreements that gave the sub final say in case of disagreement or gave it final approval authorities; providing the equipment and operators to perform the primary entity’s share of the work; providing the project controls personnel and/or handling payroll duties; providing the key personnels’ health insurance, retirement and other fringe benefits; “locating” the project management oversight team in the sub’s home office, etc. Once, about 25 years ago, we couldn’t come to anywhere near a reasonable sole source (8(a) I think) negotiated price for a highway overpass project in Tupelo, MS. We cancelled the solicitation and re-advertised under full and open competition. I don’t remember whether the follow-on was an IFB or RFP. During the advertising period, I received a call from the originally proposed primary excavation and paving sub from Columbus, MS., which was planning to bid the job as the prime. The guy asked me if I was “still interested” in the job, bidding as a sub on their “new team”. You could probably imagine the shock and embarrassment when I informed him that I was the chief of the government’s negotiation team on the original solicitation. After a few stutters, hems and haws, he quickly excused himself and hung up. At any rate, we awarded the project for almost half of the originally proposed price, within the budget and IGE. The project was successful.
  16. We were ignorant of the distinction between a “matter of responsibility” and a “matter of responsiveness” to the contract requirements”. What we did know was that there were frequent examples of primes who were fronts for subs, primes who took advantage of their small or small/disadvantaged business status, contractors who couldn’t obtain award of prime contracts for various reasons or because it was reserved for small or small disadvantaged business, etc. One form was for unrestricted solicitations (52.236-1 Performance of Work by the Contractor) and the other was for sole source or set-asides for small business, 8(a), etc.(52.219-14 Limitations on Subcontracting). In working with SBA Regional Office in Atlanta, we defined what was self-performed work for purposes of the -14 clause and included that in the form. We included the various lines for the contractor to fill in to determine intended compliance. After all, the clause clearly says “(e) Limitations on subcontracting. By submission of an offer and execution of a contract, the Contractor agrees that in performance of a contract…” Since they were “agreeing” or would have to “agree”, what did they have to complain about? They should know at the time of proposal submission how they intended to meet the self-performance requirements. Since we provided pretty straightforward explanation and description, there wasn’t much room for doubt or ambiguity to argue about later. And we required the prime to provide direct management and supervision of the job (consistent with the SBA regulations and requirements). For source selections, it was a go/no-go factor. For sole source, it was simply a requirement to include in their proposal. We never got any complaints. Those competing for set-aside construction contracts or selected for sole source construction were in a privileged class for those competitions. Congress decided that those having the opportunity to participate in a restricted competition or sole source environment must self-perform at least a certain portion of the contract work. And Congress specifically agreed that simply buying the materials for someone else to install/perform the work won’t be allowed to count as self-performed work. Similarly, for unrestricted source selection competitions, we defined what was and examples of what wasn’t self-performed work, “on-site”, with its own organization ” and provided the lines to fill in. Again, buying materials for subs to install/perform work wasn’t self-performed work. It was also a go/no-go factor. Essentially, this clause was designed to prevent a contractor from obtaining and performing a contract in name only, without providing any added value (e.g., brokering or acting as a front for other firms). It precludes a contractor from reaping the profits and credit for the work when in actuality the subcontractors perform the entire job.* FAR 36.501(a) states, in part, “To assure adequate interest in and supervision of all work involved in larger projects, the contractor shall be required to perform a significant part of the contract work with its own forces.” *See:https://publiccontractinginstitute.com/far-52-236-1-performance-of-work-by-the-contractor-a-hard-clause-for-oconus-construction-contractors/ In the 90 or so source selections and 60 or so sole source negotiated contracts while I was with the Mobile District USACE, we never had a problem, complaint or a protest from a proposer- even when we occasionally eliminated one or more proposers that didn’t or couldn’t meet the stated requirements. If I was still in the source selection business, I’d figure out a way to get or consider the information at the responsibility determination stage of the acquisition. But that would be a much more inefficient way to try to meet the intent of the clauses. You go through the SS only to find that the apparently successful offeror doesn’t intend to or can’t meet the requirement. Stupid, in my ignorant opinion. There shouldn’t be any legal problem with sole source negotiated acquisitions in requiring the proposer to show how they intend to meet the -14 limitation. Go for it!
  17. Ok, we understood you the first times, govtacct02. 🤪. The OP was referring to the prime’s markup on a sub’ prices.
  18. I don’t think that will be allowed but you can read up on that here: https://casetext.com/statute/united-states-code/title-41-public-contracts/subtitle-ii-other-advertising-and-contract-provisions/chapter-63-general-contract-provisions/section-6305-prohibition-on-transfer-of-contract-and-certain-allowable-assignments/analysis?citingPage=1&sort=relevance
  19. Since NewbieFed is a government employee, he or she should have access to their agency counsel for answers to the questions herein.
  20. Please remember that I said what you are proposing goes beyond what the industry calls GMP and what the couple of government agencies using a similar form of GMP are doing. In both cases, the owner or government make regular interim payments during performance and they incentivize cost savings by sharing cost savings within a defined band.
  21. You could ask NAVFAC or the GSA folks for their policy guidance and descriptions of their methods. I saw them a few years ago but no longer have that info. The Design-Build Institute of America(DBIA) hired me to develop a GMP model for Federal Contracting that would be compliant with the FAR. I provided it to them and they own the rights to it. It was very similar to what the GSA has developed. It is basically a much simplified FPI type contract. However, it would only be used for very complex design-build projects that aren’t suitable for FFP.
  22. Please note that both the Navy and GSA are using forms of FPIF and FPIS for design-build construction to get as close to the industry model of GMP as possible. But, of course- progress type payments are included in their methodology. That and zero contractor share of cost underruns would be the major difference here.
  23. Correct, under the scenario that I described. Its a variation of both a fixed price incentive with fixed target (FPIF), where the target equals the maximum price and what industry refers to as a Guaranteed Maximum Price (GMP). No payment unless and until the object/requirement is successful. (Edit: Profit or fee also payable but only upon success).
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